Compliance

How to register a Sole Proprietorship (Societat Limitada Unipersonal) in Andorra

Back to blog
November 9, 2020
Contents
Hiring independent contractors on Deel
Hiring full-time employees on Deel
How do payments happen on Deel?
Deel is free for contractors
Deel pricing for companies
See Deel in action
You pay for Deel now, yes?
Try Deel
Back to blog

Although Andorra is one of the smallest countries in Europe, it claims the 12th place in the world in terms of level and quality of life and has one of the lowest income tax rates in Europe and the world (maximum 10%). With such a small income taxation and the full reduction of taxes, if your annual income is lower than EUR 24,000, Andorra is one of the best countries for starting a business.

In the following article, we have compiled the necessary information and requirements for future entrepreneurs.

Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action

Registration process for Societat Limitada Unipersonal (Single-Member Limited Liability Company) in Andorra

If you, as an individual, want to form a company in Andorra, you should register your business as a Single-Member Limited Liability Company (Societat Limitada Unipersonal). In this case, there are just a few requirements you have to fulfil to set up this company type.

Name (Comú) registration

You should make sure that your business title can’t be easily confused with one that is as of now registered. Any language that uses Latin characters can be used for the title.

Apply for Andorran company incorporation

This process takes about 4 weeks on average for S.L.U. You should provide the following documents:

  • A certificate of criminal record
  • Certified passport copy
  • Certified proof of residence
  • Business plan and financial forecast
  • Bank letter of recommendation (proof that you have an account with the required amount of deposit – 3,000 euros)

Additional documents may be requested by the Registrar of Companies or Bank at any point to verify specific information. If the original documents are not in English, Spanish, or Catalan, the documents must be accompanied by a notarized translation.

Enter your business into the Register of Companies

You will have to work with a notary to have your company added to the Register of Companies (Registre de Societats Mercantils)

Obtain a tax identification number

You should give a duplicate of your company’s lease to the local commune and request a tax identification number from the tax administration.

Business taxes in Andorra

As we have already mentioned, Andorra has a low-income tax rate with a maximum of 10%. In Andorra, there are no wealth taxes, gift taxes, inheritance taxes nor capital gains taxes.

Income tax depends on your salary, and is applied in the following way:

  • If your annual salary is lower than EUR 24,000, the income tax is 0%
  • If your annual salary is between EUR 24,001 and 40,000, the income tax is 5%
  • If your annual salary is more than EUR 40,000, the income tax is 10%

Interest on bank savings and earnings will also be taxed under the personal income tax regime (but the first EUR 3,000 of interest earned is tax-exempt). Additionally, some real estate taxes apply and a Value Added Tax (VAT) rate of 4.5% applies to most goods and services. Andorra’s VAT is one of the lowest in the world (for example, in the neighbouring Spain VAT is 21%, and in France it is 20%).

Benefits of using Deel

  • Have a centralized platform that takes care of all the documentation, such as contracts, invoices, and compliance documents.
  • Manage payments in different currencies and withdraw with a payment method of your choice (SEPA, PayPal, Payoneer, or bank transfer).        
  • Get 24/7 access to customer support and a team of experts.

Hiring remotely?

Legally hire anyone, anywhere in the world, run payroll in 100+ currencies.

Deel's partnered with 100+ labor law experts so you can pick from the library of localized contract templates and legally onboard your international teammate in minutes.

From onboarding to payroll, Deel team has you covered.